On Our Radar

On Our Radar

U.K.'s May Drawn Into Spat Between Boeing and Bombardier

A Boeing Co. trade complaint against Bombardier Inc. has triggered a trans-Atlantic row.

Continue Reading Below

When British Prime Minister Theresa May meets on Monday in Ottawa with her Canadian counterpart, Justin Trudeau, the leaders are expected to discuss ways to counter Boeing's claim that Bombardier is selling its new CSeries jet too cheaply in the U.S.

Canada and Bombardier deny that and say the aerospace company isn't receiving government subsidies. Boeing's claim "is unjustifiable and based solely on Boeing's desire to limit competition," a spokesman for Canadian Foreign Minister Chrystia Freeland said.

The aerospace giant's push has puzzled analysts because it could jeopardize a potential $5 billion sale of Boeing jet fighters to Canada that would help sustain a production line in St. Louis. Canada broke off talks last month in protest at Boeing's charges against the CSeries.

Plane makers including Boeing routinely sell new plane models below what they cost to make to win market traction, analysts say. Bombardier's planned CSeries is smaller than any Boeing jet, and the U.S. company didn't make an offer last year on the contract that Bombardier secured from Delta Air Lines Inc. Bombardier has a backlog of 360 of the jets, and Delta is due to take the first of its 75 planes next spring.

"It's not picking on Canada," Boeing Chief Executive Dennis Muilenburg said in May after the company lodged its complaint with the U.S. Department of Commerce. "We have to have a fair and level playing field globally."

Continue Reading Below

ADVERTISEMENT

Industry experts believe Boeing is seeking to prevent Bombardier from expanding its product line and emulating the rise of Airbus SE, which over the past 30 years has claimed half the commercial jetliner market.

Bombardier said its jet competes in a different market segment from Boeing. Executives said the dispute isn't hindering sales of the jets, though they haven't booked a new CSeries order this year.

The dispute comes amid negotiations over the future of the North American Free Trade Agreement and other disputes between the U.S. and Canada over lumber and dairy exports. Mrs. May has been drawn in spat because the dispute could affect a factory in Northern Ireland that makes parts for the CSeries. Mrs. May relies on Northern Ireland's Democratic Unionist Party to maintain a majority in the British Parliament.

She raised the matter with President Donald Trump in a Sept. 5 phone call. Greg Clark, the British trade minister, met with Mr. Muilenburg at Boeing's Chicago headquarters last month to press for case to be dropped.

The Commerce Department is expected to make an initial decision in the week of Sept. 25. The U.S. has said it wouldn't identify potential penalties until next year.